I have been involved in digital marketing in Japan for 14 years. Fourteen years ago, working at an advertising agency that handled internet advertising involved printing out thick advertising reports (which even advertisers only glanced at) and reporting to clients on a weekly or monthly basis. The levers for advertising operations were limited to the choice of advertising media and creatives. A few years later, performance-based advertising (with Google Ads being a prime example) became the mainstream in online advertising, and ‘managing performance-based advertising’ was added as an important task for online advertising agencies. Specifically, depending on the scale of the advertising budget, the volume and quality of the work varied, including:

– Selecting advertising platforms and ad types
– Proposing and improving creatives such as ad copy, keywords, display banners, and videos
– Adjusting bids and budget allocations

Nowadays, with AI, most of these tasks are automated, and advertisers themselves can now manage advanced performance-based advertising, ushering in an era where the value of advertising agencies is being critically questioned.

Conversely, if the stance towards advertisers and advertising agencies (including vendors) has not changed over the past 14 years, it may be time to take notice. I believe that advertisers and advertising agencies (including vendors) that can provide the following types of value will survive the next 10-20 years.

1. From Short-Term View to Long-Term View

Rather than being swayed by short-term KPIs like sales and ROI, which AI excels at, it is becoming increasingly important to allocate both physical and mental resources to long-term considerations. These include questions such as “How do we want to shape our brand and products in the future?” “How do we convey our future vision to customers?” and “How do we sense and respond to the evolving needs of our customers?”

2. From “Without AI” to “With AI”

Some advertising agencies justify their 20% agency margin by claiming, “We’re doing all this work…”. However, as mentioned earlier, most of the performance-based advertising, which dominates online advertising, can now be replaced by AI. The absence of AI, which can perform complex calculations and take optimal actions 24/7, creates a significant gap between advertisers and agencies that coexist with AI and those that don’t.

3. From Narrowed View to Holistic View 

There are still many cases where advertising agencies believe their work is limited to the advertising domain, or where advertisers only focus on approving media, creative plans, and ad budgets. It is necessary to reassess these existing roles and redefine each party’s responsibilities from a broader perspective.

4. From Dependent Relationship to Independent Relationship

The future of a brand is something advertisers themselves must take responsibility for. Just as you wouldn’t entrust your child’s future to a third party without a very good reason, advertisers must realize that by completely outsourcing important tasks to an advertising agency, they are also outsourcing the future of their brand.

With the utilization of AI technology becoming widespread regardless of the size of the company, I hope that more Japanese companies (advertisers) will undergo the kind of mindset and behavior shifts described above!

Masaki “Mark” Iino
Founder & CEO
SOPHOLA, Inc